Tulips, the #Bitcoin of the 17th century
How a pandemic, FOMO, and speculation made a flower worth the same as a mansion
/THREAD/
1/ During the beginning of the 1630s in the Netherlands, tulips were difficult to cultivate and preserve.
This made them a luxury good reserved for the rich and affluent of the upper class living in mansions with big gardens.
2/ The tulip market was not organized nor regulated, as other trades, which made it easy for professional growers to enter it.
Due to the international trade expansion, the growers starting cultivating rare varieties, to achieve higher prices.
3/ The biggest change occurred when florists used tulip bulbs as speculative assets.
The market expansion led to forward bulb-purchase contracts, thus enabling trading during the entire year, and not just during the summer months when tulips bloom.
4/ Easy loans and credit for forward contract purchases led many to enter the market since not much capital was required.
People from the lower economic class (maids, servants, craftsmen) could not resist the temptation for some quick profits and entered the speculative market.